The US group walked away after a month and a half of negotiations as the two sides failed to agree on a price for the potential deal.

The announcement that it was "no longer considering an offer" sent Misys' shares down over 20 per cent at one stage yesterday. Analysts said they were surprised no rival offer for the business had emerged.

Misys, which makes software forfinancial services companies, firstrevealed it had received an indicative proposal on June 21, later disclosing that the bidder was FIS. The talks culminated in a firm offer from FIS at the end of last week.

The UK group said yesterday that the offer "materially undervalues the company" prompting the board to unanimously reject the bid. It has also withdrawn from further discussions.

George O'Connor, an analyst at Panmure Gordon, said he was "never fully convinced" that FIS was really interested in the treasury and capital markets division of the company "but thought they might have a go at Misys Banking".

He added: "Misys has some very nice assets – it's a surprise that no one else has knocked on the door."

Misys, which was founded in 1979 to serve the UK insurance market, currently has about 1,200 banking customers. The group reported a 4 per cent boost in annual revenues last month to £370m as the banking division returned to growth.

Mr O'Connor said the company had given a limited outlook for its prospects for the year given the restrictions placed on it by the takeover talks. "After the holiday season they will re-engage with the wider investment community. They will give some clarity over why Fidelity's offer wasn't enough," he said.

Misys said yesterday that the board "has confidence in the future opportunities". Analysts at Investec said the indications of success for its new banking technology "are now the strongest they have been".

He added that potential deals could include selling its banking division, and also pointed to remarks from chiefexecutive Mike Lawrie that he could target Thomson Reuters' Kondor risk management operations.